What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 116 added, 132 removed, 271 unchanged (48% of the section changed)

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We are a clinical-stage biopharmaceutical company focused on developing novel small and large molecule product candidates for immuno-inflammatory diseases.

Our proprietary KINect drug discovery platform combined with our preclinical development capabilities allows us to identify and advance potential product candidates that we may develop independently or in collaboration with third parties.

In addition to identifying and developing our novel product candidates, we are pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our novel product candidates.

We also provide contract research services to third parties enabled by our early-stage research and development expertise.

Our proprietary KINect drug discovery platform coupled with our integrated discovery approach to small and large molecules enables us to identify and advance product candidates designed to have superior target affinity, specificity and potency.

We are seeking to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our novel product candidates.

In addition, we provide contract research services to third parties enabled by our early-stage research and development expertise.

Our Key Product Candidates

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Bosakitug has potential best-in-class properties, including a very high affinity to TSLP, very high potency, an extremely low dissociation rate from TSLP leading to long residence time and enhanced neutralization activity, and a half-life that can potentially support an extended dosing interval.

The high affinity and low dissociation observed with bosakitug is the result of a unique binding interface that extends from the N-terminus to the C-terminus of TSLP.

Bosakitug has the potential to treat a variety of atopic, immunologic and respiratory diseases.

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In a Phase 2a, single-arm, proof-of-concept trial in 22 U.S.

patients with moderate to severe atopic dermatitis conducted by Biosion, bosakitug demonstrated a positive pharmacodynamic, safety and efficacy profile, with 94% of patients achieving a 75% improvement in the Eczema Area and Severity Index (“EASI”), 65% of patients achieving EASI-90, and 88% of patients achieving an Investigator’s Global Assessment (“IGA”) score of 0 or 1 (clear or almost clear skin), at week 26 (n=17).

Bosakitug was generally well-tolerated with no serious adverse events reported.

The most common treatment-emergent adverse event was headache (22.7% of patients).

Grade 1 injection site reactions, primarily tenderness, occurred in 47.6% of patients.

In June 2025, we initiated a Phase 2 trial to investigate the efficacy, safety, tolerability, pharmacokinetics (“PK”) and pharmacodynamics (“PD”) of bosakitug compared to placebo in approximately 90 patients with moderate to severe atopic dermatitis.

patients with moderate to severe atopic dermatitis conducted by Biosion, 94% of patients receiving bosakitug achieved at least a 75% improvement in the Eczema Area and Severity Index (“EASI”), 65% of patients achieved EASI-90, and 88% of patients achieved an Investigator’s Global Assessment (“IGA”) score of 0 or 1 (clear or almost clear skin), at week 26 (n=17).

Bosakitug demonstrated a strong pharmacodynamic profile and was generally well-tolerated with no serious adverse events reported.

In June 2025, we initiated a Phase 2 trial to investigate the efficacy, safety, tolerability, pharmacokinetics (“PK”) and pharmacodynamics (“PD”) of bosakitug compared to placebo in 109 patients with moderate to severe atopic dermatitis.

The primary endpoint is percent change from baseline in EASI at week 24.

Secondary endpoints at week 24 include EASI response (EASI-50, EASI-75, EASI-90), validated IGA response, body surface area (“BSA”) response, and Peak Pruritus Numerical Rating Scale (“PP-NRS”) score, relative to baseline.

We expect to announce top-line data in the second half of 2026.

We expect to announce top-line data in the fourth quarter of 2026.

Bosakitug is also currently being studied in severe asthma, chronic rhinosinusitis with nasal polyps and moderate to severe chronic obstructive pulmonary disease in China by Chia Tai Tianqing Pharmaceutical Group, Co., Ltd.

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ATI-2138 is a highly potent and selective novel investigational dual inhibitor of interleukin-2-inducible T cell kinase (“ITK”) and Janus kinase 3 (“JAK3”) for the potential treatment of T cell-mediated autoimmune diseases.

The ITK/JAK3 compound interrupts T cell signaling through the combined inhibition of ITK/JAK3 pathways in lymphocytes.

The unique dual pharmacology of ATI-2138 regulates T cell development and function both upstream (ITK) and downstream (JAK3), inhibiting both TCR-mediated and cytokine-mediated activation of T cells, which may provide a more potent and complete anti-inflammatory response.

In July 2025, we announced positive top-line results from our open-label, single-arm Phase 2a trial of ATI-2138 in patients with moderate to severe atopic dermatitis.

The trial met the primary and key secondary endpoints.

The trial was designed to investigate the safety, tolerability, PK, efficacy, and PD of 10 mg of ATI-2138 administered twice daily (“BID”) for 12 weeks.

The trial enrolled 14 patients in the United States, with 12 patients completing treatment and up to 10 patients available for the per protocol analysis.

The primary endpoints were safety related parameters and the secondary endpoints included PD and efficacy related measures.

No meaningful safety findings were observed, and ATI-2138 was very well tolerated.

We observed consistent and rapid improvement across the efficacy assessments, with a mean and median improvement in EASI score at week 12 of 61% and 77%, respectively.

Excluding one patient determined to be a statistical molecular outlier by more than four standard deviations who demonstrated systemic findings inconsistent with atopic dermatitis alone including significant non-lesional inflammation and who was not fully compliant with study drug administration, the mean and median improvement in EASI score at week 12 was 77% and 82%, respectively.

At week 12, 63% of patients experienced a greater than or equal to 4-point improvement (which is considered a clinically meaningful response) in PP-NRS.

ATI-2138 demonstrated near complete and sustained inhibition and occupancy of ITK ranging from approximately 90% at peak to 60% to 70% at trough, and a high level of inhibition of JAK3.

Proteome and transcriptome lesional skin tap strip analyses showed significant ATI-2138-dependent reduction of multiple inflammatory pathways associated with ITK, including strong downregulation of Th2, Th17, and T cell receptor (“TCR”) pathways, along with the Th1 pathway and fibrosis-related markers.

We are exploring the potential of ATI-2138 in additional indications that are relevant to the mechanism of action, including lichen planus, scarring alopecias, and alopecia areata.

We plan to initiate a Phase 2 trial in the additional indication in the first half of 2026.

The trial met the primary and key secondary safety, efficacy, and pharmacodynamic endpoints.

ATI-2138 demonstrated near complete and sustained inhibition and occupancy of ITK.

Proteome and transcriptome lesional skin tape strip analyses showed significant reductions of multiple inflammatory pathways associated with ITK, including strong downregulation of Th2, Th17, and TCR pathways, along with the Th1 pathway and fibrosis-related markers.

In April 2026, we announced plans to conduct a phased multi-part Phase 2b basket study of ATI-2138 in the three most common subtypes of lichen planus:

erosive mucosal, cutaneous and lichen planopilaris.

Lichen planus is an unaddressed chronic, inflammatory, CD8 cytotoxic T-cell-driven interface dermatitis.

We expect to initiate Part A (erosive mucosal;

cutaneous) of this trial in the second half of 2026 and intend to initiate Part B (lichen planopilaris) soon thereafter.

We are also exploring the potential of ATI-2138 in additional indications that are relevant to the dual pharmacology and mechanism of action, including other inflammatory disorders.

ATI-052, an Investigational, Novel Anti-TSLP and Anti-IL-4Rα Bispecific Antibody

ATI-052 is an investigational, novel, humanized anti-TSLP and anti-interleukin-4 receptor (“IL-4R”) bispecific antibody that exhibits high binding affinity to and dual blockade of both the upstream TSLP receptor signal transduction and downstream IL-4R activation thereby inhibiting this central proinflammatory pathway.

ATI-052 targets TSLP, which sits at the top of the inflammatory cascade;

by targeting IL-4R, it blocks both downstream IL-4 and IL-13, which are key cytokines involved in Th2-mediated inflammation and allergic diseases .

ATI-052 is an investigational, novel, humanized anti-TSLP and anti-interleukin-4 receptor (“IL-4R α ”) bispecific antibody that exhibits high binding affinity to and dual blockage of both the upstream TSLP receptor signal transduction and downstream IL-4R α activation thereby inhibiting this central proinflammatory pathway.

ATI-052 binds TSLP, which sits at the top of the inflammatory cascade;

by targeting IL-4R α , it blocks downstream signaling of both IL-4 and IL-13, two anti-inflammatory cytokines, which are critical components of Th2-mediated immunity and play a crucial role in the pathogenesis of inflammation and allergic diseases.

ATI-052 utilizes the same TSLP antigen-binding fragment (“Fab”) as bosakitug but is engineered to bind more tightly to the neonatal Fc receptor (“FcRn”), potentially extending its half-life.

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We exclusively license global rights (excluding Greater China) to ATI-052 from Biosion.

Our Investigational New Drug (“IND”) application for ATI-052 was cleared by the U.S.

Food and Drug Administration (“FDA”) in April 2025, and in June 2025, we initiated a Phase 1a/1b program.

The randomized, blinded, placebo-controlled Phase 1a portion is designed to evaluate the safety, tolerability, PK and PD of ATI-052 in healthy volunteers receiving single ascending doses (“SAD”) and multiple ascending doses (“MAD”).

We expect to announce top-line results from the Phase 1a SAD/MAD portion in early 2026.

We plan to initiate Phase 1b proof-of-concept trials in asthma (subject to IND submission and clearance) and atopic dermatitis in the first half of 2026, with top-line results from both trials expected in the second half of 2026.

Next-Generation ITK Inhibitors

We are developing next-generation covalent ITK selective inhibitors with differentiated pharmacological properties and selectivity profiles.

These JAK3-sparing inhibitors have the potential to differentially modulate T cell biology across a broad range of disease indications with extended half-lives and best-in-class potential potency, ITK occupancy, and ITK activation.

We are progressing to lead candidate selection and expect to file an IND application for a next-generation ITK inhibitor in the second half of 2026.

In April 2026, we announced positive full top-line results from our Phase 1a single ascending dose (“SAD”) and multiple ascending dose (“MAD”) portion of our first-in-human study evaluating ATI-052 in healthy volunteers.

The randomized, blinded, placebo-controlled study enrolled 48 participants across four SAD cohorts (receiving single doses of 30, 120, 360, or 720 mg or placebo) and two MAD cohorts (receiving five doses of 240 or 480 mg or placebo administered every seven days).

ATI-052 was well tolerated and demonstrated a favorable safety and tolerability profile across all dose levels.

The PK profile showed dose proportionality across the pharmacologic dose range with an estimated half-life of approximately 45 days (based on accumulation ratio at 240 mg weekly dosing).

PD results demonstrated robust

target engagement, including complete and sustained inhibition through at least week 20 (four months post last dose) of ex vivo TSLP stimulated CCL17 (TARC) and at least week 12 of ex vivo IL-4 stimulated CCL17 in the 480 mg MAD cohort.

These combined PK and PD characteristics support the potential for dosing intervals of up to every three months.

No impact of anti-drug antibodies on PK or PD was observed.

We initiated a Phase 1b proof-of-concept trial with ATI-052 in atopic dermatitis in January 2026 and a Phase 1b proof-of-concept trial in asthma in February 2026, with top-line data from both studies expected in the second half of 2026.

We plan to initiate a Phase 2b program for ATI-052 initially targeting asthma in the fourth quarter of 2026, with atopic dermatitis as a potential second indication.

ATI-9494, an Investigational, Oral Covalent ITK Inhibitor, and Other JAK-Sparing ITK Inhibitors

We are developing ATI-9494, a highly potent, oral, covalent, investigational dual inhibitor of ITK and Resting Lymphocyte Kinase (TXK), and other covalent JAK-sparing ITK inhibitors with differentiated pharmacological properties and selectivity profiles.

These inhibitors have the potential to differentially modulate T cell biology across a broad range of disease indications with extended half-lives and potential best-in-class potency, ITK occupancy, and ITK activation at low doses.

We expect to file an IND application for ATI-9494 in the second half of 2026.

Discovery and Preclinical Programs

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Our small molecule discovery efforts center on targeting kinases that play pivotal roles in various inflammatory and autoimmune pathways.

Our discovery efforts to develop multi-specific antibodies are focused on generating antibodies with superior target affinity, specificity, and potency utilizing combinations of (a) two or more clinically validated targets with non-overlapping biology, (b) clinically validated targets with novel biology, and/or (c) synergistic target combinations in an effort to address shortcomings of multi-drug administration.

This complementary approach to our small molecule programs enables us to pursue optimal therapeutic modalities for each target and indication of interest.

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“Soft” JAK inhibitors are designed to be topically applied and active in the skin, but rapidly metabolized and inactivated when they enter the bloodstream, which may result in low systemic exposure.

We are currently seeking a global development and commercialization partner for this program (excluding Greater China).

We are currently seeking a global development and commercialization partner for this program

(excluding Greater China).

In 2022, we granted Pediatrix Therapeutics, Inc.

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Since our inception, we have incurred significant net losses.

Our net loss was $45.1 million for the nine months ended September 30, 2025 and $132.1 million for the year ended December 31, 2024.

As of September 30, 2025, we had an accumulated deficit of $948.0 million.

Our net loss was $19.8 million for the three months ended March 31, 2026 and $64.9 million for the year ended December 31, 2025.

As of March 31, 2026, we had an accumulated deficit of $987.6 million.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance our product candidates from discovery through preclinical and clinical development.

In addition, our product candidates, even if they are approved by regulatory agencies for marketing, may not achieve commercial success.

We may also not be successful in pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize our product candidates.

We may also not be successful in identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates.

Furthermore, we have incurred and expect to continue to incur significant costs associated with operating as a public company, including legal, accounting, investor relations and other expenses.

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Unfavorable conditions in the economy both in the United States and abroad may negatively affect the growth of our business and our results of operations.

For example, macroeconomic events, including inflationary pressure, tariff policies, geopolitical conflicts, and the current shutdown of the U.S.

federal government, have led to economic uncertainty globally.

For example, macroeconomic events, including inflationary pressure, tariff policies, and geopolitical conflicts have led to economic uncertainty globally.

The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods.

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Exclusive License Agreement with Biosion

In November 2024, we entered into an exclusive license agreement (the “Biosion Agreement”) with Biosion pursuant to which we received the exclusive rights to develop, manufacture and commercialize bosakitug and ATI-052 worldwide, excluding Greater China.

In connection with the Biosion Agreement, we also entered into a collaboration agreement (the “CTTQ Agreement”) with Biosion and CTTQ, a licensee of bosakitug in Greater China.

As partial consideration for the rights and licenses under the Biosion Agreement and CTTQ Agreement, we agreed to, in the aggregate, (i) pay $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs, (ii) issue warrants (the “Warrants”) to purchase 14,281,985 shares of our common stock and (iii) pay $6.2 million for the reimbursement of certain development costs and drug product material as set forth in the Biosion Agreement.

In addition, we agreed to pay, in the aggregate, (i) up to $125 million upon the achievement of specified regulatory milestones commencing with product approval, (ii) up to $795 million upon the achievement of specified sales milestones, (iii) a tiered low-to-mid single digit royalty based upon a percentage of annual net sales, subject to specified reductions as set forth in the Biosion Agreement, and (iv) a portion of any sublicense consideration received from the grant of any sublicense or similar rights under any of the rights or licenses granted to us under the Biosion Agreement.

In connection with the Biosion Agreement, we also entered into a collaboration agreement (together with the Biosion Agreement, the “Biosion Agreements”) with Biosion and CTTQ, a licensee of bosakitug in Greater China.

As partial consideration for the rights and licenses under the Biosion Agreements, we, in the aggregate, (i) paid $30.0 million in upfront cash consideration, plus $4.5 million for the reimbursement of certain development costs, (ii) issued warrants (the “Warrants”) to purchase 14,281,985 shares of our common stock and (iii) paid $6.2 million for the reimbursement of certain development costs and drug product material.

As of March 31, 2026, Warrants exercisable for 3,000,000 shares of our common stock remained unexercised.

sublicense or similar rights under any of the rights or licenses granted to us under the Biosion Agreement.

We will expense these payments in the period when either they are determined to be probable of occurring or when the payment is triggered.

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In July 2024, we entered into a royalty purchase agreement with OCM IP Healthcare Portfolio LP, an investment vehicle for Ontario Municipal Employees Retirement System (“OMERS”).

Under the royalty purchase agreement, we

sold to OMERS a portion of the future royalty payments and the remaining anniversary payments associated with our existing license to Eli Lilly and Company (“Lilly”), relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata (see “—License Agreement with Eli Lilly and Company”).

Under the royalty purchase agreement, we sold to OMERS a portion of the future royalty payments and the remaining anniversary milestone payments associated with our existing license to Eli Lilly and Company (“Lilly”), relating to OLUMIANT® (baricitinib) for the treatment of alopecia areata (see “—License Agreement with Eli Lilly and Company”).

Under the terms of the royalty purchase agreement, we received an upfront payment of $26.5 million.

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The royalty payments and milestones we sold to OMERS represent our entire financial interest in the Lilly license agreement after taking into account our other contractual third-party obligations.

We recognized $0.7 million and $2.5 million of non-cash royalty income during the three and nine months ended September 30, 2025, respectively.

We recognized $0.9 million of non-cash royalty income during each of the three and nine months ended September 30, 2024.

We recognized $0.9 million and $0.8 million of non-cash royalty income related to the OMERS agreement during the three months ended March 31, 2026 and 2025, respectively.

License Agreement with Sun Pharmaceutical Industries, Inc.

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We may seek to monetize this asset.

We recognized $1.5 million of licensing revenue during the three and nine months ended September 30, 2025, a portion of which was payable to third parties.

We recognized $0.2 million of licensing revenue related to the Sun Pharma agreement during the three months ended March 31, 2026, a portion of which was payable to third parties.

License Agreement with Pediatrix Therapeutics, Inc.

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In addition, Lilly has agreed to pay us other commercial milestone payments upon the achievement of specified milestones and additional anniversary payments as set forth in the agreement, as well as a low single-digit royalty calculated as a percentage of Lilly’s net sales of baricitinib for the treatment of alopecia areata.

We have separate contractual obligations under which we have agreed to pay to third parties an amount equal to any regulatory and commercial milestone payments we receive under the Lilly license agreement, as well as a portion of the upfront consideration and a portion of the royalties we may receive under the license agreement.

In July 2024, we entered into a royalty purchase agreement with OMERS pursuant to which we sold to OMERS a portion of our future royalty payments and the remaining anniversary payments associated with the license to Lilly (see “—Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP” above).

We recognized $1.3 million and $3.6 million of licensing revenue during the three and nine months ended September 30, 2025, respectively, all of which was payable to third parties.

We recognized $0.7 million and $4.6 million of licensing revenue during the three and nine months ended September 30, 2024, respectively, a portion of which was payable to third parties.

Asset Purchase Agreement with EPI Health

We have separate contractual obligations under which we have agreed to pay to third parties an amount equal to any regulatory and

commercial milestone payments we receive under the Lilly license agreement, as well as a portion of the upfront consideration and a portion of the royalties we may receive under the license agreement.

In July 2024, we entered into a royalty purchase agreement with OMERS pursuant to which we sold to OMERS a portion of our future royalty payments and the remaining anniversary milestone payments associated with the license to Lilly (see “—Royalty Purchase Agreement with OCM IP Healthcare Portfolio LP” above).

We recognized $1.3 million and $1.0 million of licensing revenue related to the Lilly agreement during the three months ended March 31, 2026 and 2025, respectively, all of which was payable to third parties.

Asset Purchase Agreement with EPI Health, LLC

In October 2019, we sold RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”), to EPI Health, LLC (“EPI Health”) pursuant to an asset purchase agreement.

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As a result of the bankruptcy proceedings, all amounts that were due and outstanding by EPI Health had been fully reserved.

During the three months ended September 30, 2025, we sold all of our right, title and interest in our bankruptcy claims against EPI Health and wrote off the remaining reserved balance as it was deemed uncollectible.

In September 2025, we sold all of our right, title and interest in our bankruptcy claims against EPI Health and wrote off the remaining reserved balance as it was deemed uncollectible.

Agreement and Plan of Merger with Confluence

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In addition to the payments described above, if we sell, license or transfer any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, we will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances.

Restructuring

In December 2023, our board of directors approved a reduction of our workforce by approximately 46%, which was completed as of December 31, 2024.

During the nine months ended September 30, 2025, we made cash severance payments of $0.2 million to impacted employees.

During the three and nine months ended September 30, 2024, we recognized severance expense of $26 thousand and $2.6 million, respectively, and made cash severance payments of $5.2 million to impacted employees during the nine months ended September 30, 2024.

Components of Our Results of Operations

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We may obtain unexpected results from our clinical trials or other development activities.

We may elect to discontinue, delay or modify the development, including clinical trials, of some product candidates or focus on others.

elect to discontinue, delay or modify the development, including clinical trials, of some product candidates or focus on others.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

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This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements.

The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements.

We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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We record a contingent consideration liability related to future potential payments resulting from the acquisition of Confluence based upon significant unobservable inputs, including the achievement of regulatory and commercial milestones, as well as estimated future sales levels and the discount rates applied to calculate the present value of the potential payments.

Significant judgement is involved in determining the appropriateness of these assumptions.

Significant judgment is involved in determining the appropriateness of these assumptions.

These assumptions are considered Level 3 inputs.

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Significant assumptions used in our estimates include the probability of achieving regulatory milestones and commencing commercialization (collectively referred to as “probability of success”), which are based on an asset’s current stage of development and a review of existing clinical data.

Probability of success assumptions ranged between 21% and 40% at September 30, 2025.

Probability of success assumptions ranged between 21% and 40% at March 31, 2026.

Additionally, estimated future sales levels and the risk-adjusted discount rate applied to the potential payments are also significant assumptions used in calculating the fair value.

As of September 30, 2025, the discount rate ranged between 6.8% and 8.4% depending on the year of each potential payment.

During the nine months ended September 30, 2025, we recorded a charge to the contingent consideration liability of $1.9 million, which was primarily due to changes to the probability of success for certain product candidates and the passage of time.

As of March 31, 2026, the discount rate ranged between 7.5% and 9.3% depending on the year of each potential payment.

There was no change in the fair value of the contingent consideration liability during the three months ended March 31, 2026 due to offsetting impacts of the passage of time and changes in market rates.

Results of Operations

Comparison of Three and Nine Months Ended September 30, 2025 and 2024

Three Months Ended September 30,

Nine Months Ended September 30,

Comparison of Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31,

(In thousands)

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Contract research

The decrease in contract research revenue for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024, respectively, was driven by lower overall hours billed for laboratory services.

The decrease during the nine-month period was partially offset by a higher average billing rate.

The decrease in licensing revenue during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to a larger milestone achieved under the Sun Pharma license agreement during the three months ended September 30, 2024.

The decrease in licensing revenue during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to a larger milestone achieved under the Sun Pharma license agreement and higher licensing revenue earned under the Lilly license agreement during the nine months ended September 30, 2024.

We sold a portion of the royalties we may receive under the Lilly license agreement to OMERS in July 2024.

The increase in contract research revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was driven by higher overall hours billed, which was partially offset by a lower average billing rate.

The increase in licensing revenue during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was due to higher royalties earned under the Lilly and Sun Pharma license agreements.

Costs and Expenses

Cost of Revenue

The decrease in cost of revenue for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was driven by lower overall hours billed for laboratory services.

The decrease in cost of revenue for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was driven by a decrease in personnel related costs.

Research and Development

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Nine Months Ended

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Total research and development expenses

The expenses incurred for bosakitug during the three and nine months ended September 30, 2025 consisted primarily of product candidate manufacturing costs and clinical development expenses associated with a Phase 2 trial in atopic dermatitis.

The increase in expenses for ATI-2138 during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to preclinical development expenses associated with toxicity studies, which was partially offset by a decrease in clinical development expenses associated with a Phase 2a trial in atopic dermatitis.

The increase in expenses for ATI-2138 during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to an increase in preclinical development expenses and clinical development expenses associated with a Phase 2a trial in atopic dermatitis.

Research and development expenses related to ATI-052 for the three and nine months ended September 30, 2025 primarily consisted of product candidate manufacturing costs, preclinical development activities, and clinical development expenses associated with a Phase 1a/1b program.

Discovery expenses increased during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 primarily due to increased investment in our discovery-stage programs as we progressed our next generation ITK selective inhibitors toward candidate selection.

The decrease in expenses for bosakitug for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to lower product candidate manufacturing costs, partially offset by an increase in clinical development expenses associated with a Phase 2 trial in atopic dermatitis.

The increase in expenses for ATI-052 for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to an increase in clinical development expenses associated with a Phase 1a program, as well as Phase 1b programs in atopic dermatitis and asthma.

The decrease in expenses for ATI-2138 during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to a decrease in preclinical development expenses associated with toxicity

studies and clinical development expenses associated with a Phase 2a trial in atopic dermatitis, which was completed in July 2025.

The increase in expenses for ATI-9494 during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to an increase in product candidate manufacturing costs to support IND enabling studies.

The increase in discovery expenses during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to increased investment in JAK-sparing ITK inhibitors as we progress toward candidate selection.

Other research and development

The decrease in other research and development expenses during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to clinical development expenses associated with former development assets.

Personnel and stock-based compensation

The increase in personnel expenses during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to higher headcount.

The increase in stock-based compensation expense during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was due to higher forfeiture credits during the nine months ended September 30, 2024.

The increase in other research and development expenses during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to consulting costs associated with our clinical programs during the three months ended March 31, 2026.

The increase in personnel expenses during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to higher headcount.

General and Administrative

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Nine Months Ended

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Total general and administrative expenses

Personnel and stock-based compensation

The increase in personnel expenses during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to higher headcount.

The increase in personnel expenses during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to higher headcount.

Professional and legal fees

The decrease in professional and legal fees during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to business development expenses incurred in the prior year in connection with the royalty purchase agreement with OMERS.

Other general and administrative

The decrease in other general and administrative expenses during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily due to the sale of our bankruptcy claims against EPI Health.

The increase in professional and legal fees during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to higher compliance and business development-related expenses during the three months ended March 31, 2026.

The increase in licensing expense during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was due to higher royalties earned under the Lilly and Sun Pharma license agreements.

Revaluation of Contingent Consideration

The revaluation of contingent consideration loss decreased during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 mainly due to higher discount rates resulting from changes in credit spreads being applied to potential payments during the three months ended September 30, 2025.

The revaluation of contingent consideration loss decreased during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 mainly due to changes in estimated sales levels and changes to the probability of success for certain product candidates during the nine months ended September 30, 2024.

The revaluation of contingent consideration loss decreased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 mainly due to changes in estimated sales levels and market rates during the three months ended March 31, 2026, which offset an increase to the liability due to the passage of time.

This resulted in no change to the contingent consideration liability during the three months ended March 31, 2026.

Interest Income

Interest income decreased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to a lower average investment balance and lower interest rates during the three months ended March 31, 2026.

Non-cash Royalty Income

Non-cash royalty income includes income related to the proceeds from the sale of a portion of our OLUMIANT® royalty payments to OMERS in July 2024.

Non-cash royalty income was consistent during the three months ended March 31, 2026 and March 31, 2025 and includes income related to the proceeds from the sale of a portion of our OLUMIANT® royalty payments to OMERS in July 2024.

Liquidity and Capital Resources

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In addition, to the extent we are able to consummate transactions with potential third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates, we may receive upfront payments, milestone payments or royalties from such arrangements that would increase our liquidity.

As of September 30, 2025, we had cash, cash equivalents and marketable securities of $167.2 million.

As of March 31, 2026, we had cash, cash equivalents and marketable securities of $190.8 million.

Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view towards liquidity and capital preservation.

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity, other than our contingent obligations under the Confluence Agreement, Biosion Agreement and CTTQ Agreement, which are summarized above under “Overview—Acquisition and License Agreements, ” and our lease obligations.

Cash and cash equivalents were $25.3 million as of September 30, 2025 compared to $24.6 million as of December 31, 2024.

We also had $142.0 million in short- and long-term marketable securities as of September 30, 2025 compared to $179.3 million as of December 31, 2024.

We currently have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity, other than our contingent obligations under the Confluence Agreement and Biosion Agreements, which are summarized above under “Overview—Acquisition and License Agreements, ” and our lease obligations.

Equity Financing

Sales of Common Stock Pursuant to At-The-Market Facility

In March 2026, we sold an aggregate of 18.4 million shares of our common stock for gross proceeds of $59.8 million, pursuant to an amended and restated sales agreement with Leerink Partners LLC and Cantor Fitzgerald & Co., as sales agents, dated February 27, 2025.

We paid selling commissions and other fees of $1.8 million in connection with the sales.

Cash and cash equivalents were $28.7 million as of March 31, 2026 compared to $20.0 million as of December 31, 2025.

We also had $162.1 million in short- and long-term marketable securities as of March 31, 2026 compared to $131.4 million as of December 31, 2025.

The sources and uses of cash that contributed to the change in cash and cash equivalents were:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

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Net cash used in operating activities

Net cash provided by investing activities

Net cash used in financing activities

Net cash (used in) provided by investing activities

Net cash provided by (used in) financing activities

Cash and cash equivalents ending balance

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Cash flow related to operating activities was the result of:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

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Net cash used in operating activities

Net cash used in operating activities increased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily as a result of proceeds from the royalty sale to OMERS and lower net losses after adjusting for non-cash items during the nine months ended September 30, 2024.

This increase was partially offset by a decrease in cash used for accounts payable and accrued expenses, which was due to the timing of payments to vendors and severance payments in connection with the reduction in our workforce.

Net cash used in operating activities increased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily as a result of higher net losses after adjusting for non-cash items during the three months ended March 31, 2026.

This increase was partially offset by a net decrease in cash used for accounts payable and accrued expenses, after adjusting for the receipt and corresponding payment of a third-party milestone during the three months ended March 31, 2025.

Investing Activities

Cash flow related to investing activities was the result of:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

Purchases of property and equipment, net

Purchases of property and equipment

Purchases of marketable securities

Proceeds from sales and maturities of marketable securities

Payment of deferred transaction consideration for in-licensed assets

Net cash provided by investing activities

The increase in net cash provided by investing activities for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 resulted primarily from lower purchases of marketable securities and higher proceeds from sales and maturities of marketable securities during the nine months ended September 30, 2025.

Payments of deferred transaction consideration for in-licensed assets

Net cash (used in) provided by investing activities

The change in net cash used in investing activities for the three months ended March 31, 2026 compared to the net cash provided by investing activities for the three months ended March 31, 2025 resulted primarily from greater purchases of marketable securities and lower proceeds from sales and maturities of marketable securities during the three months ended March 31, 2026.

Financing Activities

Cash flow related to financing activities was the result of:

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

Payment of deferred transaction consideration for in-licensed assets

Proceeds from issuance of common stock under the at-the-market sales agreement, net of issuance costs

Payments of employee withholding taxes related to restricted stock unit award vesting

Proceeds from exercise of employee stock options and the issuance of stock

Net cash used in financing activities

Net cash used in financing activities increased for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the payment of deferred transaction consideration in connection with the Biosion Agreement during the nine months ended September 30, 2025.

Net cash provided by (used in) financing activities

The change in net cash provided by financing activities for the three months ended March 31, 2026 compared to net cash used in financing activities for the three months ended March 31, 2025 was primarily due to proceeds from sales under our at-the-market sales agreement in March 2026.

Funding Requirements

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We may not be able to generate revenue from these programs if, among other things, our clinical trials are not successful, the FDA does not approve our product candidates currently in clinical trials when we expect, or at all, or we are not able to identify and consummate transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize our product candidates.

Our primary uses of capital are, and we expect will continue to be, research and development expenses, compensation and related expenses, laboratory and related supplies, professional and legal expenses, and administrative and overhead costs.

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, research and development expenses, laboratory and related supplies, professional and legal expenses, and administrative and overhead costs.

Our future funding requirements will be heavily determined by the resources needed to support the development of our product candidates, without taking into account any potential business development activities.

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Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable us to continue to implement our long-term business strategy.

Our ability to raise additional capital may be adversely impacted by potentially worsening global economic conditions caused by a variety of factors including geopolitical tensions, tariff policies, inflationary pressures, and the current shutdown of the U.S.

federal government.

Our ability to raise additional capital may be adversely impacted by a variety of factors including changes in investor sentiment, geopolitical tensions, tariff policies, and inflationary pressures.

If we are unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of our product candidates, we may need to substantially curtail our planned operations.

We may raise additional capital through the sale of equity or debt securities.

In such an event, our stockholders’ ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a holder of our common stock.

In such an event, our stockholders’ ownership may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a holder of our common stock.

Because of the numerous risks and uncertainties associated with research and development of pharmaceutical product candidates, we are unable to estimate the exact amount of our working capital requirements.

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Louis, Missouri under a sublease agreement which has a term through May 2029.

Our aggregate remaining lease payment obligation for these two spaces was $2.7 million as of September 30, 2025.

Our aggregate remaining lease payment obligation for these two spaces was $2.3 million as of March 31, 2026.

Agreement and Plan of Merger with Confluence

We have agreed to certain payment obligations in accordance with and subject to the terms of the Confluence Agreement (see “Overview—Acquisition and License Agreements—Agreement and Plan of Merger with Confluence”).

As of September 30, 2025, the balance of our contingent consideration liability was $10.6 million.

As of March 31, 2026, the balance of our contingent consideration liability was $11.0 million.

Exclusive License Agreement with Biosion;

Collaboration Agreement with Biosion and CTTQ

We have agreed to certain payment obligations in accordance with and subject to the terms of the Biosion and CTTQ Agreements (see “Overview—Acquisition and License Agreements—Exclusive License Agreement with Biosion”).

We have agreed to certain payment obligations in accordance with and subject to the terms of the Biosion Agreements (see “Overview—Acquisition and License Agreements—Exclusive License Agreement with Biosion”).

R&D Obligations

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Segment Information

We have two reportable segments, therapeutics and contract research.

The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases.

The contract research segment earns revenue from the provision of laboratory services.

We operate and report as one reportable segment, which focuses on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases.

The segment earns revenue through the licensing of our intellectual property and the provision of laboratory services.

Our chief operating decision maker, our Chief Executive Officer, manages our operations on a consolidated basis for the purpose of making operating decisions, assessing financial performance, and allocating resources.

Quantitative and Qualitative Disclosures about Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis